capital labour substitution in the large-scale food-processing industry in pakistan: some recent...

8/10/2019 Capital Labour Substitution in the Large-scale Food-processing Industry in Pakistan: Some Recent Evidence

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The Pakistan Development Review

32:4 Part

II

Winter 1993)

pp.

847-858

Capital Labour Substitution

in

the

Large scale

Food processing Industry

in

Pakistan:

Some Recent Evidence

GEORGEE.

BAITESE SOHAlLJ. MALIK and

NARGIS SULTANA

1. INTRODU TION

Food-processing is one

of

the first industries developed by man. Most

agricultural commodities require some sort

of

processing for them to be edible. In

primitive societies man processed his own food using the simple mortar and pestle.

With the advent

of

industrialisation there emerged important implications for food

processing technologies. The workers in the industrial and

cOlllDlercial

sectors of

urban areas required greater supplies of food. This encouraged the establishment of

processing plants supplemented by storage facilities

to

ensure that the urban

population received the food that they required. Food-processing, therefore, began

to occupy a fairly predominant position in the overall industrial sector. Its

, importance

was

heightened by its strong backward and forward linkages with the

rest

of

the economy.

n a labour-surplus developing economy, where most of the labour is

unemployed

or

underemployed, the absorption

of

this surplus labour force in the

industrial sector is an important issue. n recent decades, there has been significant

growth in the industrial sector in most developing countries, in terms

of

both

investment and output. This has not resulted in a similar rate of increase in labour

absorption. This is often attributed to the adoption of inappropriate technologies see,

for example, Malik

and

Battese 1986) or to the lack

of

technological alternatives.

n this paper we seek to determine whether capital-labour substitution is possible in

the large-scale food-processing sector in Pakistan.

The

elasticity of substitution is a measure which determines the rate at which

the two inputs, capital and labour, can be substituted for each other without altering

the level of production. The existence of a positive elasticity of substitution in the

industrial sector is a pre-requisite for policy-makers to successfully implement

George

E.

attese

is

Associate

Professor

Department

of

Econometrics University

of

New England

Australia; Sohail J. Malik

and

Nargis Sultana are Research Fellow

and

Research Associate International

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